## Facts

- Cook’s Pest Control, Inc. provided termite inspection and treatment services under a one-year renewable agreement with Robert and Margo Rebar.
- The written agreement included a broad arbitration clause requiring binding arbitration for disputes involving the contract.
- Before the initial term expired, Cook’s sent a renewal notice requesting payment of the renewal fee to continue coverage.
- The Rebars sent the renewal payment together with a drafted addendum stating arbitration would not be required for disputes between the parties.
- The addendum stated that Cook’s acceptance of the renewal payment or continuation of services would constitute acceptance of the addendum’s terms.
- Cook’s deposited the Rebars’ check and continued performing services, but did not sign the addendum or expressly agree to its terms.
- The Rebars later sued Cook’s alleging fraud, negligence, breach of contract, breach of warranty, unjust enrichment, and bad faith.
- Cook’s moved to compel arbitration based on the original agreement’s arbitration clause.
- The trial court denied the motion to compel arbitration, and Cook’s appealed.

## Issues

1. Whether the Rebars’ addendum sent with the renewal payment constituted a counteroffer that materially changed the renewal terms by eliminating arbitration.
2. Whether Cook’s accepted that counteroffer by cashing the renewal check and continuing performance, thereby forming a renewed contract without an arbitration clause.
3. Whether, absent an agreement to arbitrate in the renewed contract, Cook’s could compel arbitration of the Rebars’ claims.

## Decision

- The Supreme Court of Alabama affirmed the order denying Cook’s motion to compel arbitration.
- The court treated the Rebars’ addendum as a counteroffer because it materially altered a term of the renewal by removing arbitration.
- The court held Cook’s accepted the counteroffer by conduct when it deposited the renewal check and continued providing services with knowledge of the addendum.
- Because the renewed agreement did not include an enforceable arbitration clause, Cook’s could not compel arbitration.

## Legal Principles

- A purported acceptance that changes a material term operates as a rejection and counteroffer under ordinary contract law.
- Assent to a counteroffer may be shown by conduct, including accepting payment and continuing performance after receiving the modified terms.
- An arbitration provision is a material contractual term that may be modified or eliminated by counteroffer and acceptance.
- Arbitration may be compelled only if a valid agreement to arbitrate exists; without such an agreement, a court cannot require arbitration.

## Conclusion

The court held that the homeowners’ renewal addendum eliminating arbitration became part of the renewed contract because the service provider accepted it by cashing the renewal payment and continuing performance, leaving no enforceable agreement to arbitrate.


Cook’s Pest Control, Inc. v. Rebar, 852 So. 2d 730 (Ala. 2002)